InsurancePimp_
Super Genius
- 124
Let’s say it’s 300k,
do I need 20%
Or can I use a 10%
fha works?
do I need 20%
Or can I use a 10%
fha works?
Do I always have to put 20% down on a town house or condo?
- Thread starter InsurancePimp_
- Start date
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Really depends on the lender. Most lenders will want to protect themselves with a Mortgage Protecting policy, PMI, if your downpayment is less than 20%. the tough part is getting PMI cancelled if the price of the home equity goes up after your purchase (where you now "own" more than 20%). If the home sells for 300,000 and you put down 30,000 but the average cost of your model is now 400,000, your "equity" is 130,000 but many banks will not then drop the PMI requirement
Entirely depends on the type of loan, loan amount, and credit score.
FHA requires 3.5 percent down if you’re credit score is 580 or above. If it’s below 580, it requires 10%.
Conventional requires 5 percent down if your credit is between 620 and 680. If above 680, only 3 percent is required.
Loan must be within conforming loan limits to qualify for lower down payment, which is ~$625,000 in most states.
I understand the long term concern of paying PMI, but 3% down vs 20% down is a huge difference. On a 500k home, that’s the difference between needing $15k and needing $100k, so I don’t honestly think we are referring to the same order of magnitude in terms of roadblocks when we being up the PMI.
FHA requires 3.5 percent down if you’re credit score is 580 or above. If it’s below 580, it requires 10%.
Conventional requires 5 percent down if your credit is between 620 and 680. If above 680, only 3 percent is required.
Loan must be within conforming loan limits to qualify for lower down payment, which is ~$625,000 in most states.
I understand the long term concern of paying PMI, but 3% down vs 20% down is a huge difference. On a 500k home, that’s the difference between needing $15k and needing $100k, so I don’t honestly think we are referring to the same order of magnitude in terms of roadblocks when we being up the PMI.
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InsurancePimp_
Super Genius
- 124
Thanks, so much more straight forward the. Talking to my loan officer friend.
didn’t even know you can put 5 % down on conventional loan. All they preach is 20% on everything. I got a credit of 730 ish.
so town houses and condos, can it still be conventional 5%?
didn’t even know you can put 5 % down on conventional loan. All they preach is 20% on everything. I got a credit of 730 ish.
so town houses and condos, can it still be conventional 5%?
With a 730 credit score you can put 3 percent down on conventional. That includes single family, town homes, and condos depending on the lender. I would suggest finding a mortgage broker.
Lloyds of Lubbock
Guru
- 714
If your condo does not have sufficient reserves you may have to put down 25%.
devidassprakash
New Member
- 1
As far as I know, a 20% down payment is not always necessary for a townhouse or condo purchase. It really depends on a few factors like the lender, type of loan, and your financial situation. It's always best to consult with a professional, such as a Mortgage Broker in Redditch, to get a clear idea of what your options are. They can help you navigate the process and find a solution that works best for you.
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Condo mortgage vs. other mortgage types
The major differences are that mortgages for condos often involve extra steps and additional paperwork, as well as come with slightly higher interest rates.
“Rates are typically higher by 0.125 percent to 0.25 percent,” according to Steve Nakash, managing director of Denver-based Blue Spot Home Loans, a division of Cherry Creek Mortgage. “That’s because restrictions or assessments imposed by the property’s homeowners association (HOA) or condo association are out of the borrower’s control, which creates a layer of risk for lenders.”
Your lender must obtain additional documents from either the condo association, HOA or management company, as well. These can include:
To do that, the condo project itself must be vetted and meet lender standards. For example, current lending guidelines dictate that no more than 15 percent of unit owners can be behind on their condo dues, and one investor can’t own more than 10 percent of the units, according to Jeffrey Loyd, principal of Mortgage Acuity, a mortgage broker in Hackensack, New Jersey.
Plus, the condo must maintain insurance coverage standards and not be a party to litigation that could result in financial loss to the condo association.
“Lending guidelines don’t allow for condo buildings that allocate more than 35 percent of its square footage to commercial space,” adds Loyd. “That’s because lenders think having a big slice of the building’s income sourced from one or more commercial tenants can be risky to them.”
Condo mortgage requirements
To qualify for condo financing, you have to meet specific requirements for the type of loan you’re pursuing. Here’s a breakdown of the different eligibility requirements involved, according to Orlando Miner, principal of Miner Capital Funding in St. Louis:
Conventional loan
The major differences are that mortgages for condos often involve extra steps and additional paperwork, as well as come with slightly higher interest rates.
“Rates are typically higher by 0.125 percent to 0.25 percent,” according to Steve Nakash, managing director of Denver-based Blue Spot Home Loans, a division of Cherry Creek Mortgage. “That’s because restrictions or assessments imposed by the property’s homeowners association (HOA) or condo association are out of the borrower’s control, which creates a layer of risk for lenders.”
Your lender must obtain additional documents from either the condo association, HOA or management company, as well. These can include:
- A questionnaire form about the condo project
- Information on how many units are owner-occupied versus tenant-occupied and how many are owned by one entity
- A copy of the condo association’s master insurance policy
To do that, the condo project itself must be vetted and meet lender standards. For example, current lending guidelines dictate that no more than 15 percent of unit owners can be behind on their condo dues, and one investor can’t own more than 10 percent of the units, according to Jeffrey Loyd, principal of Mortgage Acuity, a mortgage broker in Hackensack, New Jersey.
Plus, the condo must maintain insurance coverage standards and not be a party to litigation that could result in financial loss to the condo association.
“Lending guidelines don’t allow for condo buildings that allocate more than 35 percent of its square footage to commercial space,” adds Loyd. “That’s because lenders think having a big slice of the building’s income sourced from one or more commercial tenants can be risky to them.”
Condo mortgage requirements
To qualify for condo financing, you have to meet specific requirements for the type of loan you’re pursuing. Here’s a breakdown of the different eligibility requirements involved, according to Orlando Miner, principal of Miner Capital Funding in St. Louis:
Conventional loan
- 3% – 5% minimum down payment
- 620 minimum credit score
- Debt-to-income (DTI) ratio no more than 36%
- Condo unit must be your primary residence
I would like at the USDA Guaranteed program. It is for rural areas but it will surprise you how many areas fall under rural. You'll notice some major builders will build entire subdivisions right on the edge of USDA's Rural Development areas. The loan is 0 down and you qualify based on income and family members. It's a generous program with income limits as well. The lenders essentially run the program and USDA guarantees X amount of the loan. Similar to a VA loan, but there is a mortgage insurance aspect. However, it adjusts yearly with the loan and is far cheaper than FHA or PMI.
Below is the mapping link. If the area you want to look at purchasing is available, then you can reach out to your preferred lender and ask about USDA guaranteed options. If you need assistance finding a lender, I can attempt to help but all major players are doing USDA guaranteed.
https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp
Below is the mapping link. If the area you want to look at purchasing is available, then you can reach out to your preferred lender and ask about USDA guaranteed options. If you need assistance finding a lender, I can attempt to help but all major players are doing USDA guaranteed.
https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp
PrivClientSG
Guru
- 325
Depends on the lender, program, etc. Yes, 20 to 25% is "typical" -- but as it's been said, there's the FHA route, and there are similar type programs that allow anywhere between 5 and 15%. We are not back to the fog a mirror get a mortgage, NINJA days -- but we'll see them again. Maybe not as bad, but the landscape is already headed in that direction.
Also, a lender may look at a condo association and want a bigger down-payment, and don't forget, the condo association may require it too! Good luck!
Also, a lender may look at a condo association and want a bigger down-payment, and don't forget, the condo association may require it too! Good luck!
